Industry is not dead

For the Chairman of the business federation FEDIL — the Voice of Luxembourg’s Industry, Industry 4.0 is just another chapter in the process of evolution and development of a sector that remains strong and has a capacity to respond to political or technological shocks.

Nicolas Buck, the Industry 4.0 concept is developing rapidly. How important is this concept for the future of the Luxembourg economy?

“Industry 4.0 should not be viewed as an end in itself. The strategy to be adopted depends on three main considerations: What? For whom? And how? We need to define what should be developed or produced when applying this approach, specify what markets and targets this is intended for and determine the optimal production methods. We can also add the “why?”, the reason why a client chooses to work in a particular way.

Industry 4.0 is a bit of a catch-all term, but it clearly expresses the now crucial importance of connectivity and the ability to produce much more quickly in response to significant fluctuations in demand from the market, which also requires companies to be highly responsive.

The digitalisation of preparation and production processes represents an evolution, more than a real revolution. It is opening up possibilities for high-quality production in Western Europe. But this digitalisation is developing alongside other more conventional innovation processes. It is up to everyone to take the concept on board and define what it means for their business.”

Is this Industry 4.0 strategy difficult to implement?

“This depends of course on the requirements, and it is part of an effort to collect production information. With any industrial process, whatever it may be, the clients’ specifications have an essential impact on the production put in place. Over the last 40 to 50 years, all industrial firms have spent a huge amount of time trying to optimise the take-up of information received from clients and translating all of their specifications into a production environment. We need to know how to manage information waste, information that arrives late, clients that change their minds, etc.

Clearly, the Industry 4.0 approach is a key methodology that can really help increase efficiency and reduce, for instance, an entire two-week production process to just a few days. This is not necessarily done with just a quicker machine, but also by taking information on board more effectively.”

Would you say that Luxembourg is well-positioned in terms of Industry 4.0?

“We certainly have our strengths, just like other countries. We have not necessarily been pioneers, and large countries, such as Germany or France, are no doubt more advanced with their factories of the future. But with the business federation FEDIL, the Ministry of the Economy and Luxinnovation all working together, we have made major efforts. Our role is clearly to promote existing expertise that companies can benefit from. It is then up to the businesses themselves to select the service providers that they consider to be the best fit. To some extent, we are sowing seeds.

It is clear that industrial firms will not be able to do everything by themselves.

Soon, Luxembourg will launch a Digital Innovation Hub (DIH), a one-stop shop helping industrial companies to become more competitive by using digital technologies. What value does it offer to businesses?

“This initiative is first and foremost European. We have worked extensively with the European Commission’s Directorate-General Connect to clearly redefine the DIH concept and the roles of the various stakeholders, given that many institutions, virtually everywhere in Europe, have proclaimed themselves to be DIHs. The idea is to build up the most exhaustive map possible of the skills that exist here and in Europe, in order to enable companies to embark on their digital journey. This is a marketplace that enables a simplified approach to the offers that are available.”

Europe is the driving force behind this platform, which is part of the much bigger digital single market initiative. Is it important to have this type of momentum at community level in addition to national initiatives?

“The European market is of course still attractive. The challenge for Europe is to believe in ourselves. It is very clear that for external investors who want to establish a presence, this is the world’s leading market in terms of population, purchasing power or skills. Europe has a market of 500 million people, with strong links to Africa. There is no shortage of opportunities! All within an exceptional framework that not only respects intellectual property, but also ensures fair competition. For investors, it is of course essential to be able to set up in a part of the world where they do not have to compete with firms that are being subsidised by national banks. A level playing field is very important.”

What about Luxembourg? How is the country positioning itself within this environment?

“Luxembourg is still the best place for doing business in Europe! The country constantly shows positive dynamics and strong growth. It offers skills, an institutional framework, political stability, predictability in terms of taxation, streamlined processes, as well as open-mindedness and much more. Setting up in Luxembourg makes it possible not only to establish a presence in Western Europe, but also more widely across Europe.”

Does Luxembourg know how to effectively sell itself abroad?

“A country does not sell itself. No one is selling. Instead, there are people who are buying… We need to offer choices and we need these choices to be clear. The investors arriving here want to have clear answers in relation to their investment projects. And we have always been able to give them these answers. Of course, we need to maintain this capacity to listen when we meet with new companies and then be able to say “yes, we know how to do this” or, when necessary, “unfortunately, we cannot help you with this part”.”

There have recently been some major announcements in Luxembourg, including among others Goodyear’s Mercury project, Husky’s Factory of the Future and significant investments by Kronospan, Cebi International and Circuit Foil. Does this count in Luxembourg’s favour?

“These projects are of course great driving forces, because they come from international groups that are delighted to be established here. They are very well supported by the teams from the Ministry of the Economy and Luxinnovation, and the key role played by civil servants and politicians in charge of the economy up to the highest level deserves to be highlighted. The decision makers who come from abroad to continue investing are satisfied with the environment, with their access to information and with the fact that they are listened to so effectively.”

What are the next major steps in the development of Industry 4.0?

“Clearly, as always, continuous learning. The human aspect is vital. We need to orient schools and universities more strongly towards preparing students for technical and technological jobs. And “technology” goes hand in hand with “scientists”. This is essential.

The human aspect is vital.

We also need to reflect on how things will evolve and, for instance, consider the tax incentives in place. In an increasingly globalised world, we can see very clearly that the majority of investments are no longer focused on simply machines, but also on the brainpower that creates the software and processes used by machines. We therefore need to look into creating incentives that take this into account.”

You mentioned human resources. Should we focus on attracting talents or retaining them?

“We clearly need to do both! We need to both train up talented people and encourage them to come to Luxembourg. And to attract them, we need to use good arguments. The Luxembourg Digital Skills Bridge project is an ambitious initiative. It aims to encourage businesses to anticipate their needs for skills, while promoting employee mobility in a job market that is undergoing a transformation.

The rollout of this project shows that the political sector has taken on board the full scale of the challenges that lie ahead. But the equation is still the same: develop, train, attract, retain… Keeping people also means keeping businesses.”

Luxembourg is getting ready to welcome the headquarters of the EuroHPC joint undertaking in charge of supervising the development and deployment of a European network of high performance computers (HPC). What will be the impact of this decision taken by the European Commission last June?

“The Industry 4.0 concept clearly has major requirements for simulation and processing power, for conducing pure research as well as for tests and production. This HPC is therefore an essential tool. Of course, we will then need to ensure that the benefits are shared on a wide scale, so that the entire ecosystem understands all the benefits and advantages it offers.”

When do you think the first concrete effects can be measured?

“This will no doubt take several years. Europe and the associated countries are sometimes slightly head of the market, with a very pioneering approach. The economy then needs to assimilate the ideas and understand them. Alongside this, businesses’ needs will evolve. Today, an infrastructure like this might not be useful for them. But tomorrow, when this will be the case, the tool will be in place and available to them.”

For the past year and a half, the arrival of the US giant Google in Luxembourg has been mentioned. The company has even acquired more than 30 hectares of land in the centre of the country, but has not yet officially announced its decision to set up its future data centres here. Is this strong level of interest from such a giant positive for Luxembourg’s ecosystem?

“This is first and foremost a project on a very large scale. Its sheer size is interesting. And if it succeeds, this will show any potential investor that while Luxembourg is a modestly sized country, it has the skills needed for managing such a project, which includes not just making available the infrastructures, but also everything relating to energy supply and data governance. Clearly, if we are able to welcome a Google, we can welcome anyone.

If we are able to welcome a Google, we can welcome anyone.

Now, we must not lose sight of the fact that while data centres are of course an important part of the infrastructure, there are other elements within the ecosystem that we need to know how to develop. There are data centres everywhere in Europe and it is possible to imagine that there will, with time, be a concentration of the players operating on this market.”

Are you confident about the way Industry 4.0 is going to develop in Luxembourg?

“If there is one sector that is not protected by national borders and a specific regulatory framework, it is clearly industry! Through its very nature, it needs to constantly reinvent itself in relation to technological evolutions and new geographic players, as well as the various needs of clients. We should not underestimate industry’s capacity to respond to shocks, whether they are political or technological.”

So, industry is not dead…

“Definitely not! We should not simply look at the changes over the past 20 or 30 years. Industry has been developing since the 18th century and will continue to evolve in the 21st century. The sequence of things remains unchanged: scientific progress leads to new technologies, which lead to innovation. The process will always continue, possibly in other forms. And ultimately, Industry 4.0 will be just one of many chapters, but it is the one that we are living through at the moment.”

What about the human aspect? Growing digitalisation and the development of artificial intelligence are fuelling concerns that people will be replaced with machines and thousands or even more jobs will be lost. How would you assess the situation?

“The human capacity to rethink production processes is unlimited. Take a car production line: while it is true that there are far fewer or indeed sometimes no people at all involved in the initial production phases, a human presence is still essential for the assembly line.

One day, we may see car plants with even fewer people. Or maybe not. What is certain is that if someone manages to achieve this, others will need to align themselves with it. But we have always managed to create more jobs than we have destroyed.”

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